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Silicon Beach is having a very big effect on Real Estate in Southern California

Areas like Santa Monica, Venice, Marina del Rey, and Playa Vista are at the forefront of the “tech movement” and experiencing all the benefits that are associated with the large amounts of highly paid employees flooding the market. However, the often-overlooked neighborhood of Westchester, is having something of a moment and it has the potential to be the next big thing.

Westchester’s 90045 ZIP Code is one of just a handful of places in the region where house prices have returned to pre-crash levels, with the median price for a single-family home hitting $795,000 in the third quarter, according to CoreLogic DataQuick. That’s a 25% increase in the last two years. And it’s all attributed to the recent phenomenon that has brought the tech to Silicon Beach.

Media, entertainment, and tech companies have been picking up office space as fast as possible in Playa Vista. Last month, Google spent $120 million dollars on 12 vacant acres zoned for a massive office complex. That amount of space equates to roughly 6,000 new workers in the area. (Google provides about 200 sq for each employee.)

If you drive through the area you will see a wide array of traditional postwar ranch homes that were built in the ’40s and ’50s for returning GIs and aerospace workers. Another thing you will see is a good amount of space. The lots are bigger and the houses aren’t maxed out like many other areas on the Westside. With that space being a desirable “commodity” in our market we are seeing more and more people becoming interested in this previously unknown neighborhood.

Lately, a wave of rehabs and additions has also driven prices higher. Work trucks are a common sight in Westchester these days with developers and new homeowners updating these old ranches into more modern homes. It’s quite hard to believe but in the last six months three houses have sold for around $2 million and several more are on the market around the $1.5 million mark.

A growing number of the neighborhood’s postwar ranch houses are being torn down and rebuilt, often at twice the size. Some of them look more like houses you’d find closer to the beach and they’re often aimed at buyers who’ve been priced out of those neighborhoods. Many of those buyers are looking for more contemporary and modern homes. Westchester didn’t really have those until now…

According to Cyndi Hench, president of the Neighborhood Council of Westchester/Playa, the neighborhood is definitely evolving. Although it remains home to some of the children of the old Hughes engineers who moved there in the ’50s, it’s drawing more newcomers.

And when some apartment buildings going up on the edges of the neighborhood are done, and when Google opens its Playa Vista development, Hench expects her quiet pocket of town will be right in the middle of the action.

“This is going to be a different place in five years,” she said. “Westchester will definitely be on the map then.”

According to The Los Angeles Times, Google Inc. has reportedly spent nearly $120 million on 12 vacant acres next to a historic hangar where aviator Howard Hughes built his famous “Spruce Goose” airplane in Playa Vista.

With this recent transaction it’s pretty certain that the search engine company is expanding its presence in the Southern California. They currently operate in several buildings throughout LA county, including the famous Binocular building in Venice designed by Frank Gehry. However, this new Playa Vista land acquisition is zoned for approximately 900,000-square-foot of commercial space that has the potential to be both office and studio space. Google is also expected to lease the Hughes hangar built in 1943, according to The Times. The 319,000-square-foot building has recently housed soundstages for movie and television production. “The combination of the hangar space and planned development of the 900,000 square feet could bring in as many as 6,000 well-paid, highly educated workers”, per The L.A. Times.

Image via LA Times

City Councilman Mike Bonin, who represents the Westchester/Playa Vista area, is quoted as saying “the announcement solidifies the neighborhood’s reputation as a high-tech hub. This is phenomenal news for the Westside and for the Los Angeles economy.”

Local entrepreneurs and investors told The Times they’re excited about the possibilities that a stepped-up Google presence could bring. A juggernaut like Google would help bring even more attention, developers and investment to the booming area. “It increases the quality of the work, it increases the ability to network, it increases the ability to attract more people here,” said Kieran Hannon, chief marketing officer at Belkin, which has 450 employees in Playa Vista. “It has a complete knock-on effect.”

Many of you may or may not know that there was recent approval on the plan to clean up the Marina by way of a large dredging project and new restrictions on permitted materials. This is great news as the water in our marina is statistically some of the dirtiest (and most toxic) in the state. That being said, there is another project on the horizon that we can hopefully be excited about. A plan that officials are saying will better guide the development of the neighborhood in the coming years.

The Los Angeles County Board of Supervisors is considering a huge makeover plan created by county regional planners that would re-direct traffic flow and make room for an additional 200,000 square feet of retail space and 940 new hotel rooms by way of dividing the marina into a few distinct districts. These districts would consolidate certain activities so that each area will appeal to a specific type of user (visitors, boaters, residents, etc.) thereby reducing the need for people to travel all around the marina.

Image via The Argonaut

“We’ve memorialized a vision for future development in Marina del Rey that reflects its boating history and recreational use,” said Gina Natoli, a Los Angeles County supervising regional planner. “We’re very happy with how it turned out.” The approved version of the vision statement remains much the same as the original version presented in February. The plan calls for clusters of activities for tourists, boaters, residents and beach-goers in separate areas, “mobility hubs” that will serve each of those districts. It also calls for improved signage, and enhanced bicycle and pedestrian paths that will make it easier to weave around the water.

Image via Envision Marina del Rey

Here are a few of the known specifics of the plan:

The public boat launch would move to become the center of Boater’s Way, while the old boat launch would become Visitor’s Row, a retail and entertainment area.

New “low- to mid-rise hotels” would go up behind Mother’s Beach and create public spaces along the water.

The plan would also try to reduce traffic by creating “hubs” where visitors can connect to bike infrastructure, water taxis, and public shuttle buses to reduce the ridiculous parking experience that is so integral to visiting the marina now. **There is also a far-fetched rumor that the Marina could become an area where cars are totally prohibited, but we haven’t seen any clear evidence of that yet.**

Although sections of the marina have been booming, thanks to an influx of upscale residential and commercial projects, planners and county officials agreed that other sections have become worn down and dated. They hope the plan will help modernize the marina and make it the hot spot that it was decades ago.

Curbed LA stated “All of this would happen on land the county already owns, so nothing new has to be purchased to move forward with the marina plan, but the plans are decidedly long-term and could take years to see through. Advocates say that it’s time to take advantage of the marina’s amenities, upgrade the hotels, and make navigating easier. Opponents worry that the marina could lose some of its quaint and quirky charm.”

All we know is, we are excited to see what effect this plan will have on current real estate in the area!

Home buyers in Southern California markets have been seeing more and more competition lately. We have seen several listings sell with multiple offers, which is not a rare occurrence in our market. However, 27 offers on a single property is a bit out of the norm for us!

Recent research from the California Association of Realtors (C.A.R.) has provided some insight into this interesting phenomenon. According to C.A.R. survey, “U.S. ranks as top destination for international home buyers, specifically the counties of Los Angeles, Orange, San Diego, Riverside, Contra Costa, and Santa Clara.”

Viewing the country as a safe place to put their money, international home buyers preferred purchasing properties in the United States over other countries, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2013 International Clients Survey.”

85 percent of international buyers said they only considered purchasing a home in the U.S., citing that the stable government and financial system would guarantee their home investment. International buyers also chose to purchase in the U.S. for its desirable location and climate (20%), to be closer to family and friends (20%), investment opportunities (9%), changes in work and employment (9%), educational opportunities (6%), and affordable prices (4%).

International buyers purchased a property in the U.S. primarily for investment purposes or tax advantages (18%) or to rent out (14%), contrary to traditional home buyers, who purchased primarily because they were tired of renting (23%).

Looking at California specifically, Los Angeles County was the top location where international buyers purchased properties (35%). International buyers also purchased homes in Orange (22%), San Diego (20%), Riverside (14%), Contra Costa (7%), and Santa Clara (7%) counties.

• Sixty-nine percent of international buyers paid all cash for their properties, compared to 27 percent of traditional buyers who paid all cash.• Thirty-two percent of international buyers purchased the home as a primary residence, compared to 75 percent for traditional buyers, and 33 percent purchased the home as an investment or a rental property, compared to 19 percent of traditional buyers.• While the primary language of many international buyers was Chinese (36%), 70 percent communicated in English, illustrating a highly educated international clientele.• International buyers typically spent five weeks looking for properties, compared to 10 weeks for traditional buyers.• Forty-four percent of international home buyers purchased homes with designer kitchens, 26 percent purchased homes with a wine cellar, and 9 percent purchased homes with a sauna. Other home amenities that international buyers wanted include private beach, putting green, heated floors, and outdoor kitchens.

The International Clients Survey was conducted via email to a random sample of REALTORS® statewide who worked with international home buyers. Eligible respondents all closed escrow on their homes within the 12 months prior to October 2013. Access the full report on the survey findings here: http://www.car.org/marketdata/surveys/other/ and view the webinar presentation here: http://www.car.org/marketdata/videos.

According to the Wall Street Journal, these are 10 countries racing to buy American Homes:

Last year we experienced an extremely low inventory for listings in our area. However, the properties that were up for sale had such high demand that the values of these few listings skyrocketed. Now, as the market’s busiest season approaches, those increasing values are spurring more listings as homeowners regain equity lost in the crash. The supply increase is poised to damp price gains while high mortgage rates cut into demand.

According to Jed Kolko of SF-Based Trulia, “prices won’t be rising as much as they were rising last spring. It will be a less frantic market with more inventory and fewer investors.”

Inventory rose most in some of the tightest areas, from Arizona and California and Georgia to Florida, where leaps in prices erased negative equity and encourage homeowners to lock in profits. (Realtor.com)

Paul Diggle of Capital Economics Ltd. has stated that prices nationwide will climb 4 percent this year compared to 2013’s expected 11 percent gain. Increasing mortgage rates also will weigh on prices because the higher costs will push some buyers out of the market, while forcing others to look for cheaper deals.

Capital Economics Ltd. projects 30-year fixed mortgage rates of 5 percent by the end of the year. (Compare that to 4.31%, which is this week’s national average.) Rates will climb as the Federal Reserve scales back bond purchases that have bolstered the housing recovering by holding borrowing costs down.

We saw an uncharacteristic increase in listings at the beginning of the year, due to the fact that homeowners are getting a jump on the spring selling season and listing their properties earlier than usual. According to an agent from Redfin, Paul Reid, sellers are “nervous about what the spring is going to bring. They don’t know if everybody will list this spring then you’ll have a big counterbalance toward too much inventory, or if there’ll be a crunch again.

First time buyers accounted for 27 percent of completed home purchases in December, down from 30 percent a year earlier. This may be due to the fact that adjustable-rate mortgages may not be an option because of stricter lending standards adopted after the housing crash.

An increase in supply would indicate the housing market is moving toward more normal conditions as it rebounds from the five-year slump that started to turn around in 2012.

Mark Zandi, chief economist for Moody’s Analytics Inc., states “inventories had been very, very low and still are despite this turnaround. It’s part of the process toward normalization, although the weakening in demand needs to be watched very carefully if demand does not pick up in the spring, that’s going to call into question the strength of any recovery.”

Buyers of existing homes will face less competition from investors, who have caused shortages in many areas. Bulk purchases will start to slow as the foreclosure crisis fades and bargains disappear.

A few weeks ago we provided some information regarding the new developments that are in the works for Playa Vista. If you didn’t have the chance to read through that, you can find it here.

The following map was recently released and gives a better picture of how the next phase of Playa Vista will be laid out.

We are very excited to see these new “neighborhoods” develop. If you would like more information on the upcoming additions to Playa Vista please feel free to give us a call at 310.424.5512 or shoot us an email at info@bermankandel.com

The Playa Vista Community will be introducing 6 new neighborhoods in the not so distant future. Each one is unique and will fit the needs of specific buyers. You can find the preliminary information for each of the new neighborhoods below:

According to the LA Times “the sale of the 437-unit Marina Del Rey [Esprit] complex represents one of the largest real estate deals of the year…”

This luxury complex is located on Marquesas Way bordered by the B and C basins.

The record purchase was orchestrated by real estate investment firms Capri Capital Partners and Kennedy Wilson from a partnership led by former Los Angeles City Councilwoman Cindy Miscikowski. The new owners have assumed the land lease and will soon launch a $5.3 million improvement plan on the Esprit, said Ken Lombard, who is in charge of investments for Capri, based in Chicago.

Marina del Rey lies on 400 acres of unincorporated land in Los Angeles County. In recent years, county officials have mounted a push to spruce up the neighborhood around the public marina that was dedicated in 1965. The land there remains owned by the county, which has urged leaseholders to upgrade their restaurants, shopping centers, hotels and apartments in the hope of creating a more dynamic community.

The Esprit is the newest apartment complex in the marina, which was carved out of a salt marsh to become one of the largest pleasure boat harbor communities in the United States and an important source of revenue for the county. In addition to leasing the land, the county also takes a cut of apartment and boat slip rents, hotel room rentals and restaurant sales.

“We absolutely believe the marina has a tremendous amount of upside and are very excited about this opportunity,” Lombard said. “We perceive this to be the premier property there in terms of location and quality of the units.”

The 18-acre Esprit site has five buildings and a marina with 227 boat slips available for rent.

Occupancy in the apartments stabilized at 94% during the end of 2012, said Kurt Zech of Beverly Hills-based Kennedy Wilson, “and still has plenty of potential for rental growth in a steadily improving economy.”